Arbitrator Rules PCM Can Exit Troublesome BPO Contract In En Pointe Spat

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PCM has received a favorable ruling in the feud over its 2015 En Pointe acquisition, enabling the solution provider to get out from under a business process outsourcing (BPO) deal gone sour.

The El Segundo, Calif.-based company, No. 25 on the 2017 CRN Solution Provider 500, said an arbitrator has ruled that its contract with Pakistani business process outsourcing partner Ovex Technologies terminates no later than Aug. 18, Chief Financial Officer Brandon LaVerne told Wall Street analysts Wednesday.

At that point, LaVerne said PCM plans to move the services from the Ovex contract to Manilla, Philippines. En Pointe acquired a 70 percent stake in Ovex in 2006, and the company had been a captive supplier of low-cost sales, purchasing, operations, help desk, accounting and IT services since then.

[Related: PCM Claims En Pointe Overstated Profits, Stock Drops After Allegations Revealed

Nonetheless, LaVerne said PCM expects to achieve cost savings by moving the BPO work to the Philippines, where the company already has a presence.  

"Management attention has been diverted a little bit to deal with this, but we've been able to mitigate any operational issues to date, and we expect to mitigate any operational issues going forward," PCM CEO Frank Khulusi said during the company's earnings call.

LaVerne said during the earnings call that certain people and companies have been "colluding to raid Ovex employees and misappropriate our confidential information and trade secrets."

PCM is currently embroiled in four lawsuits across four different jurisdictions related to the En Pointe acquisition, and spent $1.4 million in its most recent quarter on litigation costs related to M&A activity, LaVerne said. That's up from a litigation spend of just $200,000 a year ago, according to LaVerne.  

Specifically, PCM filed a lawsuit in Orange County (Calif.) Court in February against Imran Yunus, its former director of government sales who came over in the En Pointe acquisition but left in December 2016 to join Auburn, Wash.-based competitor Zones, No. 32 on the 2017 CRN Solution Provider 500. PCM accused Yunus of taking confidential information from PCM and using it to solicit clients on Zones' behalf.

In June 2017, PCM widened its lawsuit to include claims against Ovex, Zones and former En Pointe CEO Bob Din, who are accused of conspiring to raid PCM of its Pakistani office and divert its business to Zones' Pakistani operation.

"Ovex employees have consistently described a coordinated plan by Ovex's executive management … to work with U.S.-based competitor Zones, and its Pakistani affiliate Zones PK, and help Zones PK hire away virtually all of Ovex's workforce, while taking En Pointe's [now part of PCM] confidential information with them to Zones PK," Simon Abuyounes, PCM's executive vice president of IT and operations, wrote in a May 30 declaration.

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